PLANADVISER - September/October 2019 - 25

of retirement benefits influenced their
decision to quit.
SCORE's data suggest that smallbusiness
owners may change their
tune if they learn that retirement
savings cost the employer only 2.4%,
on average, of a worker's annual
compensation, and that a retirement
plan supports employee recruitment
and retention. Ninety-four percent of
small-business owners who already
offer a plan report that it significantly
adds to their company's appeal.
By keeping such facts in mind, says
Kevin Boyles, vice president and business
development director for Millennium
Trust Co. in Oak Brook, Illinois,
advisers can address the knowledge
gap that exists among this group and
contributes to the coverage gap.
Citing his own firm's research,
Boyles observes that 66% of smallbusiness
owners
agree with the
blanket statement " Retirement plans
are too expensive. " As a result, 45%
of small companies have not formally
researched the cost of any type of
retirement plan.
According to Boyles,
the majority
of leaders at small businesses who
had investigated plan sponsorship
had considered only 401(k) plans,
which tend to have higher costs than
other plan options, such as simplified
employee pensions (SEPs), individual
retirement accounts (IRAs), Savings
Incentive Match PLans for Employees
(SIMPLE) IRAs, or payroll deduction
IRAs. Only two in 10 had sought any
information about SIMPLEs, SEPs,
payroll deduction IRAs or other plan
types designed specifically for smaller
businesses, Boyles says. Those options
tend to have lower costs than 401(k)
plans and are easier to administer.
Catherine Collinson, CEO and
president of the nonprofit Transamerica
Institute
and
Transamerica
Center
for Retirement Studies in Los
Angeles, observes that less than 10%
of the self-employed currently use a
SEP or a SIMPLE IRA.
" It's a surprisingly low take-up,
given that these are powerful vehicles
for people in this situation to actually
generate tax-advantaged dollars for
their retirement, " Collinson says.
" Interesting too is the wider conversation
about the SECURE [Setting
Every Community Up for Retirement
Enhancement] Act and open multiple
employer plans, " she says. " A lot of
savings options such as SEPs and
SIMPLE IRAs are already available for
small employers and the self-employed,
but they aren't being taken advantage
of. So it goes to show that things like
open MEPs will need strong advocacy to
make a difference for the self-employed
and the small-business community.
Advisers will have to drive the adoption
of these plans among this group. "
Simplified Services
And Outsourcing
Jamie Ohl, president of retirement
plan services at Lincoln Financial
Group in Philadelphia, stresses that
offering a retirement plan " doesn't
have to be complicated. "
" It only takes a conversation with
a financial adviser and a few simple
decisions for a small-business owner
to set up a new plan or enhance the
one it offers today, " Ohl says.
In its own surveys, Lincoln Financial
has found that over two-thirds of
small-business owners are worried
about having the resources to administer
additional benefits. The firm
recommends that they meet with a
financial adviser to help them find the
best solutions for their company, as
well as to help with tax implications
and plan design.
According to Ohl, advisers can
also help small-business owners
assess current benefits, assign value
to new benefits, and administer the
plan plus educate employees about its
benefits. For potential clients that are
especially hesitant to increase their
benefits spending, the advisory relationship
could begin with per-project,
flat-fee arrangements.
" Financial advisers and plan
providers such as Lincoln can help by
serving as a consultative partner, " Ohl
adds. In this role, the adviser " helps
small-business owners understand
solutions and make the right selections
based on their employees' needs and
helps them educate the employees. "
Reflecting on the topic of serving
small-or actually any-plans efficiently,
Matt Matrisian, senior vice
president of strategic initiatives at
AssetMark in San Francisco, says
outsourcing to firms that specialize
in adviser back-office support technology
is a great strategy. This way, the
adviser can boost his value proposition
while also securing the operational
efficiencies he must build into his business
to survive profitably, long term.
This is especially true in the realms of
compliance, and general operations for
performing investment due diligence
and determining mutual fund recommendation
suitability-all of these
are ripe for outsourcing to third-party
firms that have the appropriate skill
sets and resources.
" Supporting this outsourcing is
what AssetMark does at its core, so I'm
coming at this from a certain perspective,
but I believe many advisers will
continue to draw the conclusion that
outsourcing is becoming a smarter
way to go in these areas, " Matrisian
says. " It's all about getting the proper
tools in place, the right customer relationship
management solutions and
procedures. "
If advisers can build proper workflows
around the outsourced services,
they will be amazed by just how much
time and effort they can save per client,
Matrisian suggests. This can free the
adviser, whether the plan is small or
large, to attend to what matters most:
relationship management and defining
and proving the value proposition.
" Advisers must move away from
spending time and effort on the repeatable
and outsourceable tasks that
might previously have been the focus
of a traditional advisory business, " he
recommends. " At AssetMark, we are
helping advisers build out and demonstrate
their value proposition, structured
around a goals-based financial
planning approach. And then, of course,
we are focused on helping them add
value to the client relationship through
quality service support. We see clear
evidence that when advisers can do
both of these things effectively-add
value and demonstrate the value-they
can achieve strong and sustainable
growth. " -John Manganaro
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PLANADVISER - September/October 2019

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